We’re going to keep it simple: the meaning of CPQ is about its benefits, not its functionality. We have gone over the functions many times and in many more ways in this blog, the most extensive configure-price-quote-centric blog the internet has ever seen.
But people don't choose “functionality.” They choose benefits, a solution to their problems. That said… here’s its functionality as a sales proposal automation solution:
Sales proposal template building
Discount management
Ecommerce (a new thing for CPQ and B2B selling)
Think of those as the ingredients. But think of ingredients: no one (most no one) would sit and eat 2 cups of flour, 2 eggs, a cup of sugar, etc. on their own. But you mix those ingredients together… hey, EVERYONE likes cake!
So we’re going to define CPQ not by its ingredients (its functionality) but by its outcomes, its deliverable, its benefits. And in plain, direct terms.
1: Faster, more professional sales proposals
This is why most people add CPQ to CRM and ERP systems. They quickly learn that it takes a dedicated app to empower their sales team to quickly create professional, accurate sales quotes.
Usually, when you want the benefit of speed you sacrifice accuracy, but not with a CPQ system. The fact that the templates are preconfigured and the processes are locked-in leaves next-to-no-room for error.
You’ll go from sending spreadsheets and Word docs to sending polished professional proposals, and in ⅓ the time, too.
2: More revenue, happier customers
This is a win-win benefit largely derived from the core of every CPQ system, the product and pricing configuration engine, which — described as a functionality — empowers a rep to point-and-click and add products and pricing to a proposal.
The “more revenue, happier customers” benefit stems from how this particular feature works and improves over time. As your team continues to build proposals, winning configurations rise to the top (easily identifiable with the analytics tools in every CPQ solution).
These winning combinations are winning as they consistently address customer needs, so win #1 for the customers. The other half of the win-win is you can centrally administer and test pricing of these configurations, find that sweet spot where revenue peaks and customer satisfaction stays high as well.
Imagine trying to derive this benefit from a process where every rep uses his/her own way of doing things, stores proposals locally, etc. It is, from our point of view, indeed unimaginable.
3: More insight on closing, more oversight on sales reps
BI and analytics. Everyone today is always talking BI & analytics. And that’s a great thing, as data drives just about everything in sales today.
The thing is, most enterprise-level business applications don’t currently have analytics tools digging into the data around the most critical step in the sales process: that time between when a quote is sent and when it is signed.
CPQ does, though. With CPQ integrated into your business systems and processes, you’ll be able to spot bottlenecks, reactivate stalled deals, and get into the granular data that drives sales.
Additionally, you can see what — or who — is causing those bottlenecks. Which reps are sometimes gumming up the system and which are leading the charge? Your standard CRM-type funnels only reveal so much. A rep can look REAL busy — lots of leads, lots of opportunities, lots of noise. But you need to look at which reps are moving proposals from sent to signed most often, you need to get the data that really drives more revenue.
E.g., Joe has 200 leads and a lead to opportunity rate of 15%, but an opportunity to closed-won rate of only30%. Whereas Bob has only 100 leads, but his closed-won rate is 50%. Time to move 100 leads (or more) into Bob’s funnel.
The meaning of CPQ? Benefits, benefits, benefits
You don’t get a CPQ system because you’re lacking a product and pricing configuration functionality. You get it because you need more compelling products and pricing that help close more sales.
You don’t get it because you need another BI tool. You get it because you need to smooth the closing process and optimize your human resources.
Considering CPQ? Contact us and let’s talk about the benefits you’re after. That’s always the best place to start.
